What is $1 Million worth today? Is $1 Million enough for Retirement? The Million dollar adage has been a goal coined and minted! It stems from the 18th-century epitome of the perfect number for a lavish lifestyle. But in today’s world is $1 Million enough for retirement. What lifestyle can you expect to lead with a saving in the tune of one million Dollars? Is one million enough to relax and enjoy it? Or has inflation and the exorbitant cost of living, reduced our dreams to cinders?
The Reality of $1 Million Enough for Retirement
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It is true that a million dollars today is worth a lot less than it was worth in the 18th century. However, it is a value that many still strive to achieve. Perhaps you will not have the sumptuous feasts of the Ghost of Christmas Present in as epitomized in “Scrooge” back when we were kids. But for many, accumulating a savings worth $1 million is still a huge benchmark.
In the United States, most people who hit their 50’s have less than $20,000 saved for their retirement. So should a nest egg of $1 Million be enough for retirement? Many depend entirely on social benefits to see the end of their days. Harsh though this may sound, it is definitely not the ideal closure of a full life.
If you are thinking Breakfast at Tiffany and JetSetting around the world on a million dollars on retirement think again! However, such a sum of money could ensure that you will be living a retirement life that you deserve. Let us analyze the key features of how we can stretch $1 million into our easy retirement!
$1 Million Enough for Retirement? The Good, The Bad and The Ugly
Having a million dollars in cash tucked away in your linen drawer is not going to produce the magic key for a comfortable retirement. Investment plans for retirement require diversification. You need to get proper investment advice and invest wisely in a retirement plan that will give you the possibility of withdrawing enough profit money to live on for as many years as you grace this earth.
You must remember that the older you grow, your health expenses are going to be higher. Even if you may actually spend less in galavanting, health fees can be a total killer! Pardon the Pun! Therefore, if you are still young and of good health, you may want to rethink health insurances!
If you are still paying a mortgage, consider a life policy (though this is a standard prerogative of a lender). If you are clean of debt, a life insurance is still a good consideration, as a tribute to the rest of your family members. It is cheap if you take out a policy when you are young enough.
Another great source of income is Life Insurance.
Life insurance is different to a life policy. A life policy is set for a specific term. Therefore, if you die before the expiration time of the policy you get a lump sum. A Life Insurance is the other way around. With a life insurance, you pay a lump sum of money in front. Once you reach the age of retirement, you get a monthly annuity. This annuity will keep running for as long as you live. Be it a year or till you reach 100! (God Save The Queen – they have the magic formulas of longevity).
Although life insurance is not considered a typical retirement investment, it is a good safety net. If longevity is in your genes, then you can expect to outlive your own money. It also gives you peace of mind.
Do get advice on this, whichever part of the world you may be living in. The United States are probably the worst placed with their taxation issues. And you could easily find that Trump sharing your bedsheets here. Top income earners could be looking at almost 20% taxation on long-term gains.
Is a Traditional Portfolio of $1 Million enough for retirement?
Having a diversified portfolio from which you can withdraw a fixed percentage per year is another good strategy. However, whoever is going to manage your portfolio, unless this is going to be yourself, should take into consideration indexing for inflation.
A 5% annual withdrawal at the time of retirement will give $50,000 of disposable income. If however, you index for inflation, on your next year your will be able to withdraw your $50,000 plus the value of inflation increase. In this manner, your annual drawings are hedged against inflation. Therefore if inflation is 1.5% in the second year you will be able to withdraw $50,750. The same would go on for the third, fourth and subsequent years.
If your lifestyle can be supported with an annual income of around $50k, you can easily see that $1 Million is enough to retire on, and many retirees have lived for 30 years on more on this type of strategy.
The only disadvantage of a tradition portfolio of $1 Million, is that one can never determine the rate of return for sure. Although a 5% return plus hedging for inflation is reasonable today, it may be potentially not attainable in future.
Recessions like those of 2008 which registered the worst monetary decline since the Great War, could wipe out hopes of generous payouts. Therefore there is no such thing as an iron-clad guarantee with a traditional portfolio of $1 Million enough for retirement. You may end up outliving your capital if the rate of return is lower than your projected 5% plus inflation hedging.
Gold IRA – Backing Your Future With Real Gold – Is it a Retirement Solution?
In a recent article of “The Ultimate Guide to Gold IRA” we have discussed in depth the advantages and disadvantages of investing in “real gold” as an ultimate hedge for your retirement.
There are many arguments for and against investing in $1 Million dollars in cash vis-a-vis investing in $1 M worth of gold. Although this does not necessarily justify the question of whether “ Is 1 Million Enough for Retirement?” or not. However, there is no question that the stability of gold as an underlying asset in your IRA (Individual Retirement Account) could be safer than regular portfolio savings as detailed above.
Here are a few advantages of why a Gold IRA supercharges your savings:
- Gold IRA’s are tax-favored retirement plans
- You can contribute $5500 to your account if you are under 50 years of age and $6500 if you are over 50. Contributions may be tax deductible.
- You can invest in the underlying asset of gold through verified trustee or custodian to your gold at the top most rates.
- If you have not already managed to put away the target 1 Million dollars, this could be the better alternative to plan your retirement future.
When investing in your IRA you need to make sure that you are well informed about the safety of your cash contributions. We recommend that you read our Regal Assets Review and understand what makes a Company Top Rated from performance and statistics.
Conclusion to the Question: Is $1 Million Enough for Retirement?
Whether a million is enough for your personal retirement plans, largely depends on your present earning potential as well as your lifestyle. It also depends on your age and your commitments.
There is no question that it is never early enough to start planning for the golden days of retirement. Time flies and our potential to earn and save dwindles with age. Accumulating a million, which as we have seen is hardly the “golden nest egg” that we would imagine may also not be easy.
Timing and seeking the right advice on our future savings and investment is definitely crucial.
What are your thoughts on retirement planning? Drop us your comments in the link below. For further information, advice and direction send us an email at support (at)binaryoptionsheriff.com